Canada urged on by OPEC to fix lack of pipelines from gas fields

Gary Park

for Petroleum News

Canada’s lack of energy infrastructure has emerged as a source of concern within the ranks of OPEC, whose president, United Arab Emirates Energy Minister Suhail Al Mazrouei, said his own country’s major investments in Alberta are being hobbled by a shortage of pipelines.

In Calgary for an annual investment forum that coincides with the city’s annual Stampede, Al Mazrouei said the need for pipelines from natural gas fields in British Columbia and Alberta to proposed LNG facilities on the Pacific coast is vital if Canada hopes to gain foreign investment.

“The governments need to consider some of those major infrastructure projects if they are serious about keeping and retaining those investors and bringing more, because the resources you have are needed,” he told the Calgary Herald.

In addition, he suggested if Canada had the required pipelines, such as the Trans Mountain expansion, to export terminals it would no longer be grappling with the price differential between Western Canada heavy oil and West Texas Intermediate, which has been hovering around US$22 a barrel recently.

As well, he said Canadian gas producers are losing C$1 per thousand cubic feet through its exports to the United States, which could be corrected through LNG exports or greater investment in the petrochemical sector.

Al Mazrouei said the price discounts are “ridiculous,” insisting that more infrastructure would end that imbalance by giving investors access to global oil prices.

The UAE is Canada’s largest export market in the Middle East and has invested about C$15 billion in Alberta through its Taqa North subsidiary, with 460 employees and production of 78,000 barrels of oil equivalent per day.

Also at the Stampede, Alberta Premier Rachel Notley said there is a “good likelihood” her government will end up with an equity stake in the expanded Trans Mountain pipeline, adding that “whatever role Alberta takes will absolutely be fiscally responsible. There’s a good, solid business case for it.”

But she said that for now it makes sense for the Canadian government to extend its recent takeover of Trans Mountain for C$4.5 billion “in some fashion” until the expansion work is completed “because they’re the best proponent” to lead the construction work.

David Gallison, a research director at Canaccord Genuity, endorsed that viewpoint, suggesting there is a good chance the federal government will retain control of Trans Mountain during construction because any potential private-sector investors would likely remain leery of the risks involved.

- GARY PARK